Market Update 3/17/26

By Jerry Wagner

Market snapshot

•  Stocks: The major stock indexes posted losses again this past week. The S&P 500 fell 1.6%, the NASDAQ lost 1.3%, and the Russell 2000 declined 1.8%.

•  Bonds: Bonds also had a rough time. The U.S. Aggregate Bond ETF (AGG) fell 0.9%, while the 20-year Treasury Bond ETF (TLT) dropped 2.2%.

•  Gold: Gold futures closed the week at $5,048.80, down $109.90 per ounce, or 2.65%. The Trade-Weighted U.S. Dollar Index rose 1.50%.

•  Market indicators and outlook: Technical indicators are mostly positive for stocks, as are the strategies. The economic environment is classified as Normal, favoring stocks, bonds, and gold, but with a substantial risk of a downturn for gold. Normal is one of the best stages for stocks, with limited downside. Volatility is High and Falling, a regime historically favorable for gold over other asset classes on a return basis, although bonds eke out the top rank over gold on a risk-adjusted basis.

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Stocks

Volatility has increased this year, as evidenced by the rising VIX fear index. The stock market indexes have crested and turned lower at a rate nearly matching the rise in the VIX.

Although it’s been just three weeks since the S&P 500 Index reached a new high, stocks have fallen in each of those three weeks, bringing the Index below its 50-day moving average. It is now threatening to fall below its 200-day moving average—an even more important breach. The initial defense of this traditional bastion between a bull and bear market appears to have been successful. If the long-term uptrend is to remain intact, this level must hold and avoid being broken for more than a few days.

It is no coincidence that geopolitical events leading up to the Iranian attacks have contributed to the increased volatility in equities. With these developments occurring in the heart of the Middle East, oil prices have soared, and fears of inflation have increased. This, in turn, has pressured equities.

While the negative factors affecting stocks have been apparent over the last three weeks, the positives are less so. From a technical standpoint, the continued viability of the long-term uptrend is perhaps the most visible positive. Less visible has been the rapid deterioration of internal indicators. These have slipped significantly, even as the indexes remain within 5% of new all-time highs. This is a rare occurrence, and while it may fit the script of providing evidence for further declines in equity prices, a decent contrarian case can also be made.

First, as of Friday, the S&P 500 had fallen more than three standard deviations below its 50-day moving average. Second, advance-decline weakness had fallen to first-decile levels—the lowest possible. Third, new 52-week lows for both the S&P 500 issues and its sectors have risen to extremely high levels. In the past, each of these seemingly negative signals has led to contrarian outcomes rather than a continuation of the trend. In each case, a high percentage of historical occurrences have seen prices rebound. So far, this week has followed that precedent.

The bottom line: With conflict in the Middle East and rising oil prices and interest rates, uncertainty abounds. The stock market seems likely to fall from here, but contrarian measures suggest a bounce first. Whether that successfully defends the long-term uptrend or instead proves to be a short-term bounce will likely depend on whether the conflict, which is driving the uncertainty, comes to a speedy end.

Bonds

Yields broke higher last week as rising oil prices dominated the headlines and cast doubt on the prospects for manageable inflation. Yields on the 10-year government bond rose back to their intermediate-term high-water mark. Monday’s action reversed precisely at that point. In the past, yields have been very range-bound and respectful of the trending highs and lows. So this could be the start of a new direction for rates, although they are also likely tied to the trend in oil prices and the Middle East conflict.

With rates rising, bond prices have been tumbling. However, like yields, they have reached support levels and may soon top their intermediate-term moving average.

Meanwhile, the high-yield bond market has fallen rapidly from its latest new high. Like stocks, though, it has fallen so quickly that the asset class has moved into oversold territory, an area from which it has historically moved higher.

Gold

While gold has historically provided defense for portfolios when stocks have declined, so far it has failed to do so. It has, however, stayed above its intermediate-term moving average, though it has been trading mostly below $5,000 per ounce during the three-week stock market decline.

The traditional contrarian relationship between gold and the U.S. dollar has continued. As the following chart shows, the dollar has moved higher alongside rising interest rates, while gold has fallen. To some extent, U.S. energy self-sufficiency may be contributing to a reemergence of the dollar’s safe-haven status during times of global uncertainty.

Flexible Plan Investments (FPI) is the subadviser to the only U.S. gold mutual fund, The Quantified Gold Futures Tracking Fund, formerly The Gold Bullion Strategy Fund. Launched in 2013, the fund is designed to track the daily price changes in the precious metal in a more tax-efficient manner than its ETF counterpart, GLD.

The indicators

The short-term technical indicators of future stock market price changes that I watch are now all negative. Our QFC S&P Pattern Recognition strategy, however, had a 160% exposure to the S&P 500 Index as of Tuesday’s close.

Our QFC Political Seasonality Index (PSI) strategy returned to the stock market at the close on March 12. It will remain fully invested until April 17. (Our QFC Political Seasonality Index—with all of the daily signals for 2026—is available post-login in our Weekly Performance Report section under the Domestic Tactical Equity category.)

FPI’s intermediate-term tactical equity strategies remain mixed with a positive bias. Classic continues 100% long equities. The Volatility Adjusted NASDAQ strategy finished the week at 40% net long exposure to the NASDAQ 100. Systematic Advantage ended the week 60% net long. Our QFC Self-adjusting Trend Following strategy exited its defensive mode at the close on March 17. QFC Dynamic Trends also moved to 200% invested.

Because the QFC Dynamic Trends, Volatility Adjusted NASDAQ, Systematic Advantage, QFC Self-adjusting Trend Following, and QFC S&P Pattern Recognition strategies can employ leverage, the investment positions may exceed 100%.

FPI’s Growth and Inflation measure, one of our Market Regime Indicators, shows that markets are in a Normal economic environment stage (inflation and GDP are growing). Historically, a Normal environment has occurred 75% of the time since 2003 and has been a positive regime state for stocks, bonds, and gold. Stocks have the highest rate of return in Normal periods. Gold has the second-highest return but has also experienced high drawdown in these environments.

Our S&P volatility regime is registering a High and Falling reading. Since 2003, this environment favors gold over stocks and then bonds from an annualized return standpoint. Gold has the highest drawdown risk among the three asset classes. The High and Falling combination has occurred 17% of the time since 2003.